Leaders UAE 2019: The road to effective dispute resolution
EXCLUSIVE: Legal leaders discuss updates that can help avoid disputes and payment delays at CW conference
The final panel discussion at Construction Week’s: Leaders in Construction Summit UAE 2019 was titled Payments, Insolvency and Dispute Resolution, and saw panellists discussing a range of topics related to contract management, and dispute avoidance and resolution.
The panel, which was moderated by partner at HFW, Beau McLaren, comprised of Addleshaw Goddard’s partner, Andrew Greaves; director at HKA, Conrad Bromley; partner at Al Tamimi & Company, Ahmad Ghoneim; and partner at Pinsent Masons, Nesreen Osman.
Key topics discussed by the legal experts included the issuance of Abu Dhabi Executive Council’s circular in March 2019, instructing government departments and state-owned companies to pay construction contractors and suppliers within no more than 30 days of receiving a receipt of invoices.
The panellists also discussed the new Dubai International Financial Centre (DIFC) insolvency law that was issued by HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai in June 2019.
Greaves explained that the DIFC law only applied to the commercial enterprises that were registered with and licensed to carry out business within the free zone, adding that he hoped the law would not “discount the vast majority of contractors, sub-contractors, and employers that are working in the broader construction industry in the region”.
Calling Abu Dhabi Executive Council’s circular on payments a “positive move”, Osman said the development “was an acknowledgement at the government-level that delayed payments are a real issue in the industry”, further commending the circular for not only its focus on payment delays at the contract level, but its view of the supply chain as a whole.
Ghoneim said several amendments were being made to the UAE’s civil law procedures to make the “litigation procedure faster and more efficient”, adding: “Construction disputes will be dealt with by knowledgeable panels.”
Referring to the issuance of the circular and whether it had resulted in behavioural changes in terms of payment delays, Bromley said the document was in its “early days”, adding that the industry needed a renewed approach to ensure it could avoid disputes.
The panel agreed that the responsibility to properly administer contracts remained one that contractors must focus on to avoid payment delays, with McLaren saying that protecting contractors was important and that all parties must work together on contracts, but “self-help is the primary remedy” for contractors in disputes. Bromley said that there was a lack of liquidity in the supply chain from the top to bottom, adding that debt collectors could take “advantage of the contract mechanism” to make sure they are paid.
Another topic of discussion among the panellists was whether clients were to blame for payment delays. HKA’s Bromley explained that putting employers at fault was an “easy complaint to make”, but some contractors would agree to that “this is not always the case”. He explained that there had been instances when contractors did not deliver what was required, which was necessary ensure that they would be fully paid. Moreover, Bromley said, contractors must also maintain solid records from the beginning of their contract to avoid payment delays.
Commenting on alternative dispute resolution options, Osman said: “We are seeing changes in more formal methods such as arbitration and litigation that are making it easier for parties to pursue their claims. The aim is to try and make it easier for international companies to do business here and pursue any payment claims that they may have.”